Rebuilding and Altering the Consumer Financial Protection Bureau

It would be an understatement if the hearing on February 8th, 2011 would be considered as anything less than tame. During opening statements alone, which were typically no longer than two minutes, both attacks and decibels were on the rise. Whether on the attack or coming to the defense of the Consumer Financial Protection Bureau (CFPB) there was no shortage of heated debate and lively conversation.

The purpose of the hearing was to talk and discuss the three documents that were being proposed. These include House Resolution (HR) 1355, HR 2081, and HR 3871. In an attempt to move the CFPB from the Federal Reserve to the Treasury Department, HR 1355 also wants the CFPB to update its budget on a more regular basis. Additionally, HR 2081 seeks to remove the CFPB board member from the board and to replace their seat with the chairman of the Federal Reserve. Finally, HR 3871 addresses the multiple oversights within the Dodd-Frank Act. More importantly, the resolution ensures that any personal information given to the CFPB will remain privileged and cannot be divulged to any third parties.

First Up At Bat

Congresswoman Maloney (D, NY-14) with her usual fiery and passionate opinion was on split on the resolutions. On one hand she supports HR 3871, to keep personal information privileged, but she also condemned the other resolutions. Maloney stated that the two bills were an attempt to seriously misguide and distract the CFPB from its work, to protect the American consumer. In opposition of HR 2081, she argues that the whole point of having the CFPB board member was to ensure and promote interaction between regulators. Furthermore, of all the three resolutions she seems to dislike HR 1355 the most; Maloney claims it is “the most blatant attempt to disassemble the bureau.” By moving it from the Federal Reserve to the Treasury Department she fears it will send the bureau into chaos. In the Treasury Department, the CFPB would be subject to appropriations, which she believes regulators should not be subject to. Maloney claims that with the move the American people will be without an effective watchdog, and it would additionally eliminate the Consumer Financial Penalty Fund. Coming to the defense of the CFPB even more, she accredits them for their cooperation and successes, specifically with their semi-annual report justifying their budget, their 14 testimonies before Congress, and the fact that the CFPB has a budget cap.

De-fragmenting the CFPB

Praising the idea of holding these kinds of hearings, Representative Hinojosa (D, TX-15) exclaimed that everyone should support the strength, independence, and accountability of the CFPB. After the economic collapse and the American consumer being left holding the bag, it was evident that it was because the regulatory agency was too fragmented at the time to be effective. From that troubled fragmentation, the CFPB emerged with its overarching goal of protecting the people. Hinojosa backs the idea of making sure the CFPB is fulfilling its job, but subjecting it to an appropriations committee and stripping the director of his membership to the board, in addition to cutting its budget, is completely counterproductive and only will hurt the peoples’ protection.

Offering Up HR-2081

Representative Renacci (R, OH-16) was given a chance to defend his resolution, HR 2081, by stating that in order for consumer protection to be fully committed, one has to apprehend that the consumer is the driving force of the economy. With that mindset, it is imperative to then realize that the consumers therefore depend on a sound financial system. Renacci stated the CFPB needs to be rid of special interests that favor one segment of the economy over another. Moreover in order for a reliable financial system to be in place, the director of he CFPB and the Federal Deposit Insurance Corporation (FDIC) need to be able to work and make decisions without any conflict of interest, which is what would happen, in his opinion, should the CFPB director not sit on the board.

Declaration of War

Powerful words came from Representative Scott (D, GA-13) when he accused the three measures as being nothing short of a “declaration of war on the CFPB.” With a laundry list of defenses for the CFPB, Scott passionately fought for consumer protection. Stating that with the annual funding and the Consumer Financial Fund, being revoked, in addition to the reduced amount of resources available to consumers, while also removing some of the oversights of the CFPB, will weaken and jeopardize the unfettered protection of consumers. These three resolutions also put the CFPB into a “straightjacket” which enables them from doing anything for the American consumers.

The Last Stand

Representative Royce (R, CA-40) came to the defense of the resolutions despite the attacks on the reforms by his Democrat counterparts. Royce reminded the witnesses that moving the CFPB to the Treasury Department was always the plan since the beginning and the move should not have been a surprise to anyone. He also exclaimed that these reforms would consequently reduce the future potential for abuses that may come from the agency. Simply looking at the massive budget that the CFPB possess, Royce believes that the large budget, in conjunction with the broad regulatory authority of the bureau, it should be run by a board of individuals and not simply one person.